Britain has become the first G7 country to agree to a free-trade agreement with the Gulf Co-operation Council, marking a major milestone in the UK’s post-Brexit trade strategy opening the country up to billions in investment.
The FTA, announced by Prime Minister Keir Starmer on Wednesday, is expected to strengthen economic ties between the UK and the six-member Gulf bloc comprising the UAE, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar.
Government officials described the deal, which could add £3.7 billion ($5 billion) to the UK economy, as one of the most significant trade agreements since Britain left the European Union. When the talks were launched in 2022, the financial benefits were estimated at £1.6 billion.
British officials said an estimated £580 million in duties a year will be removed, based on current UK exports to the GCC, once the agreement is fully implemented. The initial round of tariff reductions would take away £360 million in duties paid.
The GCC nations combined are equivalent to the UK’s 10th largest trade partner, with demand for imports to the bloc forecast to double by 2050. Current bilateral trade amounts to about £53 billion.
Data boost
British officials said the FTA includes “first-of-its-kind” GCC commitments on the free flow of data.
Mr Starmer hailed it as a major achievement for British business and international trade relations, after four years of negotiations concluded on Wednesday.
“Today’s agreement is a huge win for British business,” he said. “The Gulf states are valued economic partners and this agreement deepens that relationship, building trust and unlocking new possibilities for trade and investment.”
Under the terms of the 2,000-page trade treaty, tariffs on a range of British exports will be removed, including on food such as chocolate and butter, medical equipment and luxury cars, such as those made by Rolls-Royce. Most tariffs are set at 5 per cent.
The deal also features commitments aimed at improving market access for UK companies and supporting long-term economic co-operation between Britain and the Gulf.
According to government estimates, the FTA could boost the UK economy by around £3.7 billion annually over the long term. There are about £580 million in duties levied every year based on current export levels to GCC countries.
Brilliant for both
The UAE’s ambassador to Britain, Mansoor Abulhoul, issued a post on X hailing a “welcome boost” that will “bring the economies of the UAE and UK even closer at a pivotal inflection moment for global trade”.
He said it was time to “double down [on the] vital UAE-UK partnership”, which has supported thousands of jobs through £25 billion of trade.
Bahrain's ambassador to the UK, Sheikh Fawaz bin Mohammed Al Khalifa, said the deal was the next chapter of a deep and growing partnership. “The kingdom of Bahrain, alongside our GCC colleagues, looks forward to fully harnessing this tremendous potential of the agreement and to bringing real, tangible benefits to our peoples,” he told The National.
The deal will be “brilliant” for both the British and the GCC countries, Eddie Lister, a former prime minister’s special envoy to the Gulf, told The National.
“It’s a sign of commitment which is so valuable, because it gives a lot of confidence. Everybody's going to feel the UK and the Gulf is the right place to be trading and that's going to be good for businesses both ways,” he said.
It will also be “super important for investment into the UK by Gulf countries” and will “accelerate” the British economy.
“Equally, it's good for the Gulf economies, because I think it will also encourage investment into the UK and into British companies,” he added.
With GCC imports to double by 2050, officials said it was “a great opportunity for UK business”. Being the first G7 country to strike such a deal was a “big competitive advantage for the UK”, they added.
The agreement will make it easier for British companies to expand operations across the Gulf region, a market that has become increasingly important for UK exporters in recent years. Sectors expected to benefit include agriculture, food and drink, healthcare technology, renewable energy and financial services.
It could also create new opportunities for small and medium-sized businesses seeking to establish a presence in rapidly growing Gulf economies.
For the UK, the agreement strengthens commercial ties with one of the world’s fastest-growing economic regions at a time when the government is seeking new export markets beyond Europe.
For Gulf countries, the partnership offers increased access to British goods, services and expertise across a range of sectors.
Key partners
The region has become an increasingly important trading partner for Britain, with annual trade between the UK and Gulf countries already worth £54 billion, making the GCC Britain’s fourth-largest non-EU export market.
Analysts believe the new agreement could accelerate investment flows in both directions, particularly in infrastructure, technology and clean energy projects.
By reducing costs and simplifying trade rules, the deal is expected to help British companies compete more effectively in Gulf markets, where demand for advanced products and services continues to grow.
The government said the agreement also reinforces Britain’s long-term strategic partnership with Gulf nations.
“Today’s announcement sends a clear signal of confidence – giving UK exporters the certainty they need to plan ahead and reinforcing the strength and stability of the UK's trading relationship with the Gulf at a critical moment,” said Peter Kyle, UK Business and Trade Secretary.
The announcement comes amid broader efforts by the UK government to boost economic growth, after several years of uncertainty following Brexit.
